Aug. 26 (Bloomberg) -- Gold rose in New York for a second straight day after Federal Reserve Chairman Ben S. Bernanke offered no plan to provide further stimulus for the economy.
While Bernanke said the central bank has the tools to spur growth, he refrained from outlining a plan for a third round of so-called quantitative easing. The Fed pledged on Aug. 9 to keep the benchmark interest rate between zero percent and 0.25 percent through at least 2013 to help stimulate the economy. The next policy meeting is Sept. 20. Gold futures slumped as much as 11 percent in the three days through yesterday, after touching a record $1,917.90 an ounce on Aug. 23.
“The gold camp wanted to hear more about easing and more stimulus, but we just got put on hold until September,” Frank Lesh, a trader at FuturePath Trading LLC in Chicago, said in a telephone interview. “All the problems that drove the price of gold up are still out there. All Bernanke did today was move the decision to a proper time.”
Gold futures for December delivery gained $34.10, or 1.9 percent, to settle at $1,797.30 at 1:58 p.m. on the Comex in New York. Prices are down 3 percent the past five days, the first weekly loss in eight weeks. In after-hours electronic trading, prices jumped as much as 3.7 percent to $1,828.90.
“Although important problems certainly exist, the growth fundamentals of the United States do not appear to have been permanently altered by the shocks of the past four years,” Bernanke said today in prepared comments at a mountainside symposium in Jackson Hole, Wyoming, hosted by the Kansas City Fed. “It may take some time, but we can reasonably expect to see a return to growth rates and employment levels consistent with those underlying fundamentals.”
Gold is in the 11th year of a bull market, the longest winning streak since at least 1920 in London, as investors seek to diversify away from equities and some currencies. Before this week, gold climbed for seven consecutive weeks, the longest rally since April 2007. Prices are up 26 percent this year.
“At the end of the day, they’re still going to have to do something to push up this economy,” Frank McGhee, the head dealer at Integrated Brokerage Services in Chicago, said in a telephone interview.
Traders are buying gold to hedge against financial turmoil in case European Central Bank President Jean-Claude Trichet signals any policy changes in Europe at Jackson Hole over the weekend, Adam Klopfenstein, a strategist at MF Global in Chicago, said in a telephone interview.
“Stocks are like spoiled kids who want daddy Bernanke to keep bailing them out, but he doesn’t feel the need to step in,” said Klopfenstein. “Everyone’s now fearful of what Papa Trichet can say to move markets.”
Silver futures for December delivery rose 20.8 cents, or 0.5 percent, to close at $41.001 an ounce on the Comex, down 3.5 percent this week.
Platinum futures for October delivery gained $4.50, or 0.2 percent, to $1,826.90 an ounce on the New York Mercantile Exchange. Palladium futures for December delivery rose $4.90, or 0.7 percent, to $758.10 an ounce on the Nymex.
This week, platinum lost 2.6 percent and palladium gained 1.2 percent.
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